Business Valuation Blog | Understanding Buying / Selling a Company

Valuation Purposes: Internal Business Planning

Posted by Business Valuation Specialists LLC on Apr 8, 2024 7:30:00 AM

Business Appraisal for Planning Proactively

There are many reasons why a business owner should engage in an independent third-party appraisal of their company. They may be looking to sell, refinance, restructure, buy out a partner, or bring in new investors. But what about the importance of simply understanding realistically what your company is worth today by hiring a certified, experienced, unbiased professional to provide you with a complete analysis that you can rely on?

This is what we like to refer to as internal business planning. This broad purpose can cover a lot of areas, but more importantly, it’s a catch-all term that represents the owner’s interest in staying on top of the big-picture perspective of business value today, while providing insights into the shorter-term plans for the future.

It’s always a benefit to understand the real value of any type of asset, whether that’s your home, personal property, equipment, or even your net worth as an individual. If you own a business, the same mindset should be in place. Once a year, take the time to look at your company’s most recent performance in comparison to historic results, and when you have the current financial statements formalized, reach out to an appraiser and have the company value updated.

Once you’ve established a relationship with a professional valuation expert, they can likely provide some form of a discount for continued loyalty and service so the cost component of the work will not outweigh the benefit. As your business plans continue to develop throughout the year, the appraisal you’ve proactively sought out early on will come in handy as you complete your internal requirements. It will also be helpful to third parties who may get involved with your company’s operations.

Value is always going to be a critical component of any business transaction. Don’t get caught wondering or guessing what your business might be worth in the middle of a negotiation or when considering how much additional income you might have to increase employee wages or purchase new equipment.

The reasons to obtain an independently certified appraisal on a regular basis are many, and the more you plan ahead in anticipation of one of those events, the better prepared you will be to handle it effectively and efficiently. Reach out to a valuation professional today to learn more and get the process started.

Topics: business appraisal, valuation, reasons for business valuations